Los Angeles City Council members unanimously voted Wednesday to pass an amendment to cap third-party food delivery app fees at 15 percent.
In an attempt to help small businesses during the COVID-19 pandemic, Councilmember Mitch O’Farrell presented the amendment, which would limit third-party companies such as Postmates and Uber from charging restaurants more than 15 percent for their delivery services.
The amendment also set a 5 percent cap on other services provided by the delivery companies, such as advertising and takeout orders.
“Most income for restaurants is generated when customers dine in. Then came COVID-19,” O’Farrell said. “Restaurants went from having a fraction of their sales from delivery, to between 70 and 90 percent of their current sales.”
Councilmember Paul Korets further expressed that the pandemic has forced small business restaurants in Los Angeles to use third-party services, where the fees have become “almost unprofitable” because of the restaurant’s inability to have their regular dine-in services.
The motion did not go without opposition, however, as Councilmember Bob Blumenfield had reservations about interfering with business-to-business practices.
Blumenfield brought forth a motion to further amend the ordinance, but it failed with a 4-10 vote. He was not totally opposed to the overall purpose of the ordinance, however, as he and all 14 council members later voted “yes” on the motion.